Via Rail has chosen Germany's Siemens AG over Canada’s Bombardier Inc. (T.BBD.B) for a $989-million contract to build new locomotives and rail cars.

Via Rail, headquartered in Montreal, Quebec, is updating its train fleet that runs between Quebec City and Windsor, Ontario. The company confirmed the new contract with Siemens in a news release, which will see trains built at its North American manufacturing hub in Sacramento, California.

Deliveries of the new trains are scheduled to begin in 2021 and go into service in 2022. Via Rail and Siemens also announced Thursday a 15-year technical services and parts agreement valued at $355.5 million.

The Canadian rail company requires 32 new trains to maintain its current capacity of 9,100 seats. Federal Transport Minister Marc Garneau said the decision to bypass Bombardier and workers at its plant in La Pocatiere, Quebec is justified because Canada's free trade agreements with the European Union and the United States don't allow Via Rail to favour Bombardier in the awarding of contracts.

Although the trains will be made in the United States, the deal is with the company's Canadian division, Siemens Canada, which the company says employs 4,300 people at 44 Canadian locations. Siemens says its trains will offer passengers a quieter, smoother and more accessible ride, with carbon emissions as much as 80% lower than the current fleet.